Vodafone and CK Hutchinson, parent comnpany of Three UK, are expected to announce a merger which could fundamentally change the telecoms landscape in the UK.
As per the Financial Times, the new entity should be valued at approximately $18.86bn ($11.3bn equity value and $7.54bn debt).
If the deal comes through, the company will be the world’s biggest mobile operator, counting some 28 million customers.
Investor pressure
It would also bring the number of mobile operators in the UK down to three, which is something regulators previously blocked, the publication reminds (In 2016, a merger between Three UK and O2 was blocked).
Finally, the deal would see CK Hutchinson, which is a Hong Kong–based business, leave the UK market.
The news of the two companies combining first broke a year ago when the Financial Times reported Vodafone facing investor pressure to offload underperforming assets and go after deals in competitive markets (the UK, Italy, Spain). Since then, the deal has been postponed multiple times, like when chief executive Nick Read departed in 2022. Vodafone has been seeking a replacement ever since.
If the deal does come through, Vodafone would hold 51% of the new company, with CK Hutchinson holding the remainder. Once Vodafone UK combines with Three UK, CK Hutchinson would sell its stake to Vodafone, as well. However the entire process, according to the media, could take at least another year, as regulators take their time with the approval process.
The biggest issue for regulators, the Financial Times further states, is that a consolidated market might lead to a concentration of power and rising prices. Earlier this year, it says, most UK mobile operators increased their tariffs by roughly 14%.
So far, both companies avoided commenting to the press about the news.
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Via: Financial Times
